What is a Quotation?
How Does a Quotation Work?
For example, a quotation for Company XYZincludes the real-time , , size, price of the last trade, size of the last trade, the high price for the day, and the low price for the day. Quotations are available from the exchanges online, via the media, or in financial publications.
A level I quote is the real-time bid and ask price for a security that trades on the Nasdaq or over-the-counter markets. They do not disclose which market makers are bidding for or the security, whether there are limit orders on the security, or the size of potential trades at a particular price.
A level II quote is a set of real-time trading information for a security that trades on the Nasdaq or over-the-counter markets. It includes the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, the high price for the day, the low price for the day, and a ranked list of the real-time and ask prices from participating market makers.
A level III quote includes all of the above but also allows a market maker to change its bids, offers, and order sizes for securities in which it makes a , as well as execute orders, change , and send out trade confirmations.
Why Does a Quotation Matter?
Quotations are necessary to inform investors about the prices of securities. The information contained in a quotation is sometimes limited; for example, it may not disclose whichmakers are bidding for or the security, whether there are limit orders on the security, or the size of potential trades at a particular price. In other words, quotations do not give the viewer access to the "order book" showing who has an interest in a security and at what price. But quotations do give traders and investors a basic idea of how a security is doing.
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